Make a down payment of a new gym

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Reference no: EM132652006

Irfaz and Izhaar Fitness Company is establishing a fund to make a down payment of a new gym. The deal will require $950,000 at the end of 5 years.

(a) The company plans to put a fixed amount into the fund each year for 5 years, the first payment to be made in one year. Assume the fund will earn 12% per annum. What annual contribution must be made to accumulate $950,000 at the end of 5 years?

(b) If Irfaz and Izhaar Fitness company decides to set aside a lump sum today at 12% instead of making annual payments, how much should this sum be?

Reference no: EM132652006

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